How Eqyptian lender saved Mayfair Bank from imminent collapse

Had Egypt’s Commercial International Bank (CIB) failed to acquire stake in local lender Mayfair, the bank would be staring at volatility as the COVID-19 storm unfolded.

The Ksh.3.7 billion capital injection that followed the 51 per cent stake acquisition in April this year underscores the saving grace of mergers and acquisitions in the domestic banking scene.

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Just before the pandemic swept in, Mayfair’s core capital sat just above the Central Bank of Kenya (CBK) Ksh.1 billion threshold at Ksh.1.1 billion.

Had the deal failed to materialize, Mayfair would presently be operating below the regulatory cap as the lender takes in increased provisions costs occasioned by riskier borrower profiles.

The provisions which have eaten from capital would have eventually scrapped through the bank’s liquidity profile and likely informs summons from the regulator.

Instead. Mayfair’s core capital is now up at Ksh.4.2 billion as of September 2020 while liquidity is perched up at healthy 89.9 per cent above the CBK’s 20 per cent minimum requirement.

Nevertheless, the bank has to contend with asset deterioration with gross non-performing loans ticking upwards to Ksh.125.8 million from Ksh.31.6 million at the same time last year.

The new capital injection have helped uplift the banks total operating income by 59.4 per cent to Ksh.299.8 million from Ksh.188.1 million in 2019.

Both interest and non-funded income (NFI) have lead the growth in operational income signalling MayFair’s maturity in balance sheet agility.

With assets of Ksh.12.3 billion including aKsh.4.7 billion in net loans to customers, Mayfair is bound to evolve into a stronger bank flanked by the support of the Egyptian parent company.

Other lenders in line for similar outcomes include TransNational Bank- now Access Bank which has its eyes set on the agriculture niche with plans for branches centred in crop producing counties.

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